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      07-21-2013, 06:40 AM   #1
conradb
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Question ED 2014 M5

I'm interested in moving up from my 2011 E92 M3 3yr lease to the new F10 M5 for 2014. I ended up paying ~$890/mo for a 3yr/36k mi ED lease. I think I screwed up, though, as this was my first lease. I paid entirely up front and I don't think there were any security deposits. I want to make sure I walk in to the dealer saying the right things and get the best deal.

I'm interested in a base M5 in Singapore Grey. I was trying to use the BMW Configurator website to estimate everything. I want to place my order to do April 2014 delivery, so I figure Xmas might have the most perks from BMW NA ($1500 cash?).

Does it make a difference in any way for pricing if I want to make this a corporate car (my own s-corp entity)? Preferably, I would like to minimize my tax burden as much as possible, so spending more up front (even putting 100% cash down) is fine.

The configurator was done as so:
Euro Delivery - Invoice Price: $79,445

Capital Cost: $80,445
Fees: $0
Tax: 9% (LA)
Reg: $600

Term: 36mo
Down: $0
MF: 0.0013
US MSRP: $92,425
Residual: 59%
Security Deposits: 7
Return Fee: $0

Monthly w/ Tax: $903.80
Drive Off: $9,103.80
Total Cash Out: $32,536

What do I have to work with here? Do security deposits count as a lease payment? I plan to go back to the same dealer (South Bay BMW) to see if they'll work with me since I'm a repeat customer. I can be very flexible. I want the best deal, but I also want to reduce my s-corp pass-through tax burden the most. I ran my 2011 M3 coupe through this thing, and they said $678/mo. If that's accurate, I got screwed. Help me not get screwed again! Thanks!

Last edited by conradb; 07-21-2013 at 06:49 AM..
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      07-21-2013, 03:03 PM   #2
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Base residual is currently (July 2013) 50% for 10,000 miles/year, 52% for 12k, and 53% for 15k. With your money factor, are you accounting for the MSDs? If not, you can get better. Base rate is 0.00127. Take away .00049 from the 7 security deposits and you arrive at a nadir of 0.00078.
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      07-21-2013, 03:34 PM   #3
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Quote:
Originally Posted by eleven11 View Post
Base residual is currently (July 2013) 50% for 10,000 miles/year, 52% for 12k, and 53% for 15k. With your money factor, are you accounting for the MSDs? If not, you can get better. Base rate is 0.00127. Take away .00049 from the 7 security deposits and you arrive at a nadir of 0.00078.
I did not account for the MSDs. I didn't know they could bring the MF down.

Do the MSDs count towards the lease payments? As in, they are not extra money I have to put up on top of the lease? If I were to pay the entire lease up front, could I have 7 MSDs in that? I don't know if BMW will finance a corporate car.

Has the residual value gone up at all in the past? Do you think it will be any higher by xmas for a 2014 model?

Thanks for the info!

Last edited by conradb; 07-21-2013 at 03:42 PM..
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      07-21-2013, 04:12 PM   #4
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Quote:
Originally Posted by conradb View Post
I did not account for the MSDs. I didn't know they could bring the MF down.

Do the MSDs count towards the lease payments? As in, they are not extra money I have to put up on top of the lease? If I were to pay the entire lease up front, could I have 7 MSDs in that? I don't know if BMW will finance a corporate car.

Has the residual value gone up at all in the past? Do you think it will be any higher by xmas for a 2014 model?

Thanks for the info!

if you use all 7 MSDs and are doing a ED, you best MF should be about .00108 ('best' MF seen on board .00127 +.0003 ED premium - 7(.00007))

go to BMWconfig.com. On the configurator, the first tab lets you build the car (be sure to select ED or USA port of entry on far right); the second tab lets you work finance numbers.

use the 2013 M5 (jan) numbers, and add ~$600 to the MSRP/Invoice to give the rough estimate of the 2014 base actuals. Multiply the MSRP of any additional options not listed by .91 to get invoice price. You can also use this site to calc the effect of MSDs. Try to negotiate with your CA for something of invoice +XXXX dollars. Given the number of allocations (and that they come from the dealers pool for ED), this may be harder than last year depending on where you are. I ended up at about invoice plus $3500, but some folks have done better. All else fails contact a board sponsor client advisor and see what they can do.
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      07-21-2013, 04:45 PM   #5
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Quote:
Originally Posted by B-1 Pilot View Post
if you use all 7 MSDs and are doing a ED, you best MF should be about .00108 ('best' MF seen on board .00127 +.0003 ED premium - 7(.00007))
Thanks for the edit. I forgot about the ED premium.

conradb,
The MSDs (multiple security deposits) are completely optional. In fact, most (uninformed) individuals don't use them. With them, you're essentially giving BMW money to hold (which I'm sure they invest), and they drop your money factor .00007 per each (max 7 or .00049). I've read analysis of it being equivalent to a 10-12% ROI.

The residuals fluctuate. The recent transition to the MY2014 July M5 saw a residual drop from the final MY2013 June M5 by ~4%. I cannot give a good estimation of the December rates (someone else here may be able to). Another popular BMW forum has an 'Ask a Dealer' section where the monthly rates are posted - you could go back and check month-to-month rates from last year to get an idea.
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      07-21-2013, 05:16 PM   #6
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Quote:
Originally Posted by eleven11 View Post
Thanks for the edit. I forgot about the ED premium.

conradb,
The MSDs (multiple security deposits) are completely optional. In fact, most (uninformed) individuals don't use them. With them, you're essentially giving BMW money to hold (which I'm sure they invest), and they drop your money factor .00007 per each (max 7 or .00049). I've read analysis of it being equivalent to a 10-12% ROI.

The residuals fluctuate. The recent transition to the MY2014 July M5 saw a residual drop from the final MY2013 June M5 by ~4%. I cannot give a good estimation of the December rates (someone else here may be able to). Another popular BMW forum has an 'Ask a Dealer' section where the monthly rates are posted - you could go back and check month-to-month rates from last year to get an idea.
I'm still a bit confused about the security deposits. Does BMW use those as payments towards the lease though? Am I paying extra for that on top of the lease payments?
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      07-21-2013, 05:29 PM   #7
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Quote:
Originally Posted by conradb View Post
I'm still a bit confused about the security deposits. Does BMW use those as payments towards the lease though? Am I paying extra for that on top of the lease payments?
These have no impact on your total direct lease payments. At the end of your lease, that money is still yours. You can have them write you a check to get it all back (100%) or have it rolled into your next lease if you would like. For example, if your monthly payments are $1000, you give BMW $7000 (aside from the lease payments) and they lower your overall lease cost (by dropping the money factor (i.e. "loan" cost)).

If you choose to do MSDs, you give them that money up front. This benefits you by lowering the overall cost of the lease. Alternatively, you may be good at investing and have better returns on that money than the total savings you gain from MSDs.
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      07-28-2013, 03:36 AM   #8
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Does my MF = 0 is I pay the entire lease up front? Is that a wise choice? I did that on my M3 and it didn't seem to be a problem.
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      07-28-2013, 09:59 AM   #9
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Quote:
Originally Posted by conradb View Post

Has the residual value gone up at all in the past? Do you think it will be any higher by xmas for a 2014 model?
Over the 2013 model year the residuals crept up from 48% (15,000 miles) at launch in sept. to 54% for 15,000 miles. So over the year, yes they went up. How much they will go up between now and December is anyones guess. I wouldn't expect them to go up more than a point or two in that time frame though. Towards the end of the 2013 model run there was a lot of M5 inventory sitting on dealers lots. So raising the residual to help move those cars prior to the 2014s coming out is probably the reason the residuals came up towards the end of the 2013 model year. I too will be ordering in the Nov-Dec time period and would love to get a 57% residual, but I'm expecting something like 54%-55% for a 10,000 mile lease come December.

Current residuals are 50% for 15,000 miles 52% for 12,000 miles and 53% for 10,000 miles BTW.
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      07-28-2013, 10:30 AM   #10
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Quote:
Originally Posted by conradb View Post
Does my MF = 0 is I pay the entire lease up front? Is that a wise choice? I did that on my M3 and it didn't seem to be a problem.
I believe this may be the case, given that BMW isn't "loaning" you any money. I never considered that before, as I've never done a single-pay lease. Therefore, MSDs shouldn't even be calculated.
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